secure digital payments - cega

Secure Digital Payments: Improving Public Welfare Programs

K A R T H I K M U R A L I D H A R A NW I T H P A U L N I E H A U S &S A N D I P S U K H T A N K A R

HIGH COSTS OF DELIVERINGGOVERNMENT TRANSFERS

SECURE PAYMENTS AS STATE CAPACITY

S EVERAL G ROUNDS FOR O PTIMISMA S W ELL AS S KEPTICISM

• Optimism– Reduce leakage; improve payment experience– Expand feasible set of anti-poverty policies– Leapfrog literacy constraints to Financial Inclusion– Will be a “game changer” for governance (former FM)

• Skepticism – Complex implementation challenges– Subversion by vested interests– Exclusion errors – Reduced incentives for officials to implement programs– Cost effectiveness based on untested assumptions

THE AP SMARTCARD PROGRAM

AN AMBITIOUS PROJECT THAT REQUIREDMANY PARTNERS TO SUCCEED

J-PAL Global, CEGA, OmidyarNetwork, Unique Identification Authority of India (UIDAI), Government of Andhra Pradesh

R O L L O U T WAS R AN D O M I Z E D AT S U B - D I S T R I C TL E V E L I N 8 D I S T R I C T S W I T H 2 0 M I L L I O N P E O P L E

ASSESSING IMPLEMENTATION

• GoAP achieved 50-60% coverage in rolling out carded payments over 2 years

• Some relevant US Comparisons– Replacing checks with EBT in Social Security took 15 years– Healthcare.gov

• Evaluation based on “as is” evaluation under real-world implementation (and corresponding challenges)

– Several ‘process’ insights shared with Govt. of India

SIGNIF ICANT POSIT IVE PROGRAMIMPACTS ON SEVERAL DIMENSIONS

OVERWHELMING SUPPORT FOR THE PROGRAM

New system91%

Old system3%

Neutral6%

NREGANew system

93%

Old system3%

Neutral4%

SSP

IMPACT

• Govt. of AP– Almost scrapped program in mid 2013– Results presented by PS & CS to CM to continue program

• Govt. of India– Some uncertainty about program continuation with new govt.– Results presented to PM/FM multiple times

• Broader Impact– Several public lectures in India (chaired by top officials)– Op-eds by us as well as others– Results used widely by other stakeholders in FI/DBT

HIGH COSTS OF DELIVERINGGOVERNMENT TRANSFERS

O VERALL I MPACT OF AB ETTER- I MPLEMENTED NREGS?

SIGNIF ICANT POSIT IVE PROGRAMIMPACTS ON THE RURAL ECONOMY

TRANSFORMING THE WELFARE STATE?• Secure payments allow two classes of interventions

– Implement existing policies better (AP Smartcards)– Replace distortionary subsidies w/ income transfers (food, energy)

• Most policy-relevant area may be food security– Default of PDS plagued with leakage; can cash transfers do better?– Both beneficiary preferences & nutrition impacts need to be determined

• Our work in Bihar and (now) Rajasthan directly speaks to this– Offer randomly-selected HH the option of exchanging in-kind entitlements for

an experimentally varied cash transfer– In pilots - ~80% of HH in Bihar prefer cash; take-up rate is ~60% at even half

the value of the subsidy! Nutrition impacts will be seen in the full study– Powerful way of politically de-risking the process of policy experimentation

SUMMARY• Secure payments can have transformative impact on the delivery

of anti-poverty programs in developing countries– But, implementation details really matter

• Theoretically-grounded rigorous empirical evaluation (and iterative feedback into design and implementation) can be a critical complement to the technology itself

– Rapid feedback on implementation, impact, and voter preferences – Insulate against policy-making by anecdote– Grounds marketing hype in reality (OLPC, Micro-finance)– Better design can mitigate against heterogeneity– Growing policy-maker demand for evidence at highest levels– Exciting times to be innovating and evaluating in this space